Updated: June 21, 2024
The potential cost savings achieved when moving to cloud computing is a well-documented value proposition promoted by cloud vendors. The quickest and most common way to understand the immediate financial benefits of a move to cloud computing is by running a Total Cost of Ownership (TCO) calculator or model. Savings tend to be wide-ranging and are generally defined by four IT-focused attributes: Servers, Storage, Network, and IT Labor.
Models may reflect savings of 7% to 60% (or more), depending on current architecture and infrastructure. These purported savings often yield very attractive opportunities for CAPEX and variable expense reductions that businesses simply can’t afford to ignore.
However, Senior Executives and IT Leaders must consider additional factors beyond TCO savings when making the decision to move to Cloud Computing. Businesses considering a move to cloud computing should adopt an approach that includes a strategy-based cloud adoption framework and a supporting business case.
The Cloud Adoption Framework must address the multifaceted impacts on Finance and Cost Management, Governance, Operations, Service Management, and other factors while maintaining business and IT strategic alignment. Cloud economics factors are wide-ranging depending on industry verticals and can include:
Ability to meet and exceed mission-critical application performance needs
Vendor Scalability and Flexibility
Security requirements
Contract and Service Level Agreement terms
Balancing IT operational “wants” with financial realities
Managing cloud services can be a significant change from the processes used to manage an organization’s current IT operations. Organizational and operational impacts to the business, IT, and customers are essential elements in the adoption framework planning process.
Our discussions with clients and cloud vendors indicate a great deal of uncertainty still exists surrounding where to begin strategically planning a cloud transition. Faced with mandates to reduce IT spend, cloud adoption strategies must counterbalance transition and operational risks to both IT and the business. When making the decision to move applications to cloud computing, Senior Executives and IT Leaders must look beyond the initial cost savings and fully understand the potential business impact.
Recent Case Studies and References (2022-Current)
Case Study: Global Manufacturing Leader
A global manufacturing leader embarked on a comprehensive cloud transformation journey to enhance operational efficiency and agility. By leveraging a phased cloud adoption framework, they achieved:
35% reduction in IT operational costs
45% improvement in application deployment speed
Enhanced scalability to support global operations
The framework addressed key areas such as finance, governance, and security, ensuring alignment with business goals and industry standards.
Case Study: Financial Services Firm
A leading financial services firm transitioned to the cloud to meet evolving regulatory and security requirements. The structured approach included:
Implementation of robust security protocols
Flexible and scalable infrastructure to handle peak loads
Seamless integration with existing on-premises systems
This resulted in a 50% reduction in infrastructure costs and improved disaster recovery capabilities.
Emerging Trends in Cloud Computing
Sustainability and Green Cloud Initiatives
Businesses are increasingly prioritizing sustainability in their cloud strategies. Cloud providers are now offering green cloud options that utilize renewable energy sources, significantly reducing the carbon footprint of IT operations.
AI and Machine Learning Integration
Cloud platforms are integrating AI and machine learning capabilities to provide advanced analytics and automation, driving business innovation and efficiency.
Edge Computing
With the rise of IoT devices, edge computing is gaining traction. By processing data closer to the source, businesses can achieve lower latency and improved performance for real-time applications.
Conclusion
Brookey & Company uses a multi-step, phased cloud adoption framework to plan and execute cloud strategies that capture cost savings, manage risk, and keep Business and IT aligned. You need a trusted advisor to help you plan and execute your journey to the cloud.
For more information, read our Insights “5 Reasons Why Your Organization Needs a Cloud Strategy Now” to explore the strategic imperatives driving cloud adoption and the benefits of a well-crafted cloud strategy and “5 Factors Preventing Cloud Computing From Delivering Expected Cost Savings” to understand the challenges that can erode anticipated cost savings from cloud adoption and how to mitigate them.
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